Prodigy Finance has launched a $25 million education note in partnership with the Credit Suisse impact investing and micro finance team.

Prodigy Finance has launched a $25 million education note in partnership with the Credit Suisse impact investing and micro finance team.

The bond – described as the first of its kind – invests in higher education, in particular the world’s leading MBA programs.

The moves reflects how, at a time when conventional bank finance has come under pressure, other methods are being developed – and the high net worth sector appears to be a particularly ideal sector to tap.

Prodigy's peer-to-peer lending model offers affordable loans to international students at top business schools via funding provided by a community of alumni and other investors, including HNWIs.

“The partnership with Credit Suisse allows us to turbo charge our reach among high net worth and family office investors, complementing our community funding efforts and bringing diversity and scale to our programs,” said Cameron Stevens, chief executive and founder of Prodigy.

Stevens said at least 75 per cent of the students assisted will be from emerging markets, which will drive a “great combination of social purpose and sound financial returns.”

The note aggregates underlying Prodigy Finance bonds based on particular schools, and with a focus on emerging markets. The bond has an expected performance-based internal rate of return of 5-6 per cent and a weighted average life of 5.5 years.

“Investors are sensitive to the topic of education,” Olivier Rousset of Credit Suisse told this publication. “They relate to it, many of them having been through higher education themselves.”

“Most clients were surprised we could create an investment in the education space,” Rousset added. “They thought education was only possible to support through grants. But with this note we've shown we can invest in education and scale up the industry to make the sector more sustainable.”

Looking ahead, he said the idea is to replicate the structure to launch similar products, adding: “We see a long-term partnership with Prodigy.”